Growing up in the investment business, I learned cynicism from some great investors. I try to apply it every day, because trust and gullibility are two key ingredients for a short investment career.
We look carefully through what others call "trash" and search for flaws undetected in "darlings." I cringe at throwaway expressions that symbolize an accepted joyful condition, such as "synchronized global growth," in part because it's used as an absolute with no possible chance of stalling or derailing.
Market players tend to act in concert; that's what determines a hot trend, but positive momentum is usually accompanied by a healthy dose of skepticism, forcing the innovators and bulls to dig deeper and prove them wrong. Right now, the skeptics seem to have either given up or are in hiding.
As the S&P 500 doubled in three years from a low of 666 in March 2009 to over 1300 in March 2012, most investors were relieved that they hadn't lost all their money or their jobs managing money. By 2014 it had tripled from its 2009 low to 2000, at which point the background noise was decidedly pessimistic about interest rates, the economy, China, you name it.
Yet, in January 2018 with the S&P 500 at a dizzying 2850, I am noticing more bullishness than at any other time along this steep climb.
More troubling is a pervasive belittling of cynicism. This morning, I heard a highly accomplished market savant explain that the only downside to the current market is geopolitical risk. That was code for "there's really no problem at all" since we know, of course, that nuclear threats, terrorist events, Ebola outbreaks, and government shutdowns have been barely perceptible market disrupters.